Financial reporting standards and interpretations applied
The consolidated financial statements of the LANXESS Group as of December 31, 2013 were prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the European Union (E.U.) and the corresponding interpretations, together with the additional requirements of Section 315a, Paragraph 1 of the German Commercial Code (HGB).
Fair value measurement
In May 2011 the International Accounting Standards Board (IASB) published IFRS 13, a new standard that addresses questions relating to measurement at fair value. IFRS 13 also prescribes additional disclosures in the notes to the financial statements relating to fair value measurement. Its application had no material impact on the financial position or results of operations.
Presentation of items of other comprehensive income
In accordance with the amendments to IAS 1 issued in June 2011, items of other comprehensive income are now segregated according to whether or not they may subsequently become reclassifiable to profit or loss if certain conditions are met.
Accounting for pensions and other post-employment benefits
Starting on January 1, 2013, the LANXESS Group applied the revised version of IAS 19 issued in June 2011. The revisions address the recognition and measurement of expenses for defined benefit pension plans and termination benefits. In compliance with the respective financial reporting standards, the accounting changes were applied retrospectively. There are also changes with respect to the disclosures required in the notes to the consolidated financial statements.
Since the option used by the LANXESS Group in accounting for actuarial gains and losses already corresponded to the mandatory method, application of the revised version of IAS 19 had no material impact on the financial position or results of operations.
The accounting changes did not affect the amount of provisions for pensions and other post-employment benefits as of January 1, 2012. The changes had the effect of increasing the provisions for pensions and other post-employment benefits and the other reserves as of December 31, 2012, by €1 million and €5 million, respectively. Net income for 2012 was reduced accordingly, taking into account deferred tax income of €3 million. Accordingly, earnings per share for 2012 decreased from €6.18 to €6.11. The other reserves as of December 31, 2013 were increased by €5 million and net income for 2013 was reduced accordingly, taking into account deferred tax income of €4 million. In both years, €2 million of the reduction in net income pertained to the operating result and €7 million to the financial result. The related tax effects are mainly reflected in other comprehensive income as deferred tax expense. The application of the revised version of IAS 19 diminished earnings per share in 2013 from minus €1.85 to minus €1.91.
Offsetting of financial assets and financial liabilities
In December 2011 the IASB published amendments to IFRS 7 requiring additional disclosures about the offsetting of financial assets and financial liabilities. Details of any netting arrangements for amounts that do not meet the criteria for offsetting under IFRS must also be disclosed. Since the changes solely relate to disclosure requirements, their first-time application had no impact on the financial position or results of operations of the LANXESS Group.
The mandatory first-time application of the following financial reporting standards and interpretations in 2013 currently have no impact, or no material impact, on the LANXESS Group:
- Amendments to IAS 12: Deferred Tax – Recovery of Underlying Assets
- Amendments to IFRS 1: Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
- IFRIC 20: Stripping Costs in the Production Phase of a Surface Mine
- Amendments to IFRS 1: Government Loans
- Various IAS and IFRS 1: Annual Improvements to IFRS, 2009 – 2011 Cycle